Bramston v Murphy & Anor

Where statutory machinery gives a tribunal exclusive jurisdiction to determine the validity or amount of a tax assessment, the High Court cannot make a binding declaration on that liability, even by consent. The exclusion extends to proceedings whose substantive effect is substantially equivalent to adjudicating on an open assessment. The court may nevertheless determine an issue between other parties where that issue forms part of a separate civil claim, although case management may be required to avoid inconsistent decisions. The proper course may include staying or dismissing proceedings against the Revenue and coordinating the tax appeal with related civil proceedings.

The liquidator of DCC Realisations Ltd sought directions concerning excise duty on cider stock held when the company entered administration. The parties changed their positions during the proceedings. The dispute became, in substance, whether DCC was liable for the duty at all and whether the assessment was valid.

The administrators objected that the High Court lacked jurisdiction because the statutory tax appeal route was exclusive. The liquidator sought a determination binding on HM Revenue and Customs and the administrators, partly because the duty issue affected a possible negligence claim against the administrators.

1. The court could not make a declaration binding on HM Revenue and Customs concerning DCC’s liability for, or the validity of, the excise duty assessment. The originating application, despite its formal wording, was substantially equivalent to adjudicating on an existing open assessment. It therefore fell within the absolute exclusionary rule identified in Vandervell Trustees v White [1971] AC 912 (paras [18]–[23]).
2. The rule was not confined to the precise relief sought. In Vandervell Trustees v White, the House accepted that liability to tax and the validity and quantum of an assessment were matters for assessment and the statutory appeal procedure. The judge noted disagreement among the Law Lords about extending that rule to underlying questions of fact or law in proceedings which did not seek a ruling on tax liability. That distinction did not assist the liquidator because the present proceedings sought the tax-liability determination in substance.
3. The approach summarised by Robert Walker J in Glaxo Group v Inland Revenue [1995] STC 1075, namely that jurisdiction is absolutely excluded where relief is more or less co-extensive with adjudicating on an open assessment, was applicable. Proceedings which come close to that position may also be declined as a matter of discretion (paras [21]–[22]).
4. The position between the liquidator and the administrators was different. The duty issue was realistically a preliminary issue in a possible negligence or breach-of-duty claim. The application was therefore stayed or dismissed as against HMRC, while the remainder was adjourned for directions so that the parties could consider joinder in the tax appeal, an undertaking to abide by its result, or coordinated determination by the same judge sitting in both capacities (paras [23]–[28]).

Not an appeal. The judgment concerned an adjourned application for directions in the High Court.